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Internal Wage Structures and Organizational Performance

Author

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  • P. B. Beaumont
  • R. I. D. Harris

Abstract

This paper considers whether a hierarchical or compressed wage structure is positively associated with relatively high levels of organizational performance. To date, there has been little empirical research in this area (especially in the UK). Thus we present an operational measure of a compressed/hierarchical wage structure, using UK manufacturing micro-data in five industrial sectors, and examine its relationship with labour productivity. We find that the wage compression argument holds in one sector but not for the majority of sectors and that taking into account other, intra-industry characteristics, namely size and ownership differences, further weakens the relationship. Copyright Blackwell Publishing Ltd/London School of Economics 2003.

Suggested Citation

  • P. B. Beaumont & R. I. D. Harris, 2003. "Internal Wage Structures and Organizational Performance," British Journal of Industrial Relations, London School of Economics, vol. 41(1), pages 53-70, March.
  • Handle: RePEc:bla:brjirl:v:41:y:2003:i:1:p:53-70
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    References listed on IDEAS

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    1. Robone, S & Jones, A. M & Rice, N, 2008. "Contractual Conditions, Working conditions, Health and Well-Being in the British Household Panel Survey," Health, Econometrics and Data Group (HEDG) Working Papers 08/19, HEDG, c/o Department of Economics, University of York.
    2. Andrew J. Oswald & Eugenio Proto & Daniel Sgroi, 2015. "Happiness and Productivity," Journal of Labor Economics, University of Chicago Press, vol. 33(4), pages 789-822.
    3. Xiangdong Wei, 2007. "Wage compensation for job-related illness: Evidence from a matched employer and employee survey in the UK," Journal of Risk and Uncertainty, Springer, vol. 34(1), pages 85-98, February.
    4. Buhai, Sebastian & Cottini, Elena & Westergaard-Nielsen, Niels, 2008. "The impact of workplace conditions on firm performance," Working Papers 08-13, University of Aarhus, Aarhus School of Business, Department of Economics.
    5. Viscusi, W Kip & Aldy, Joseph E, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," Journal of Risk and Uncertainty, Springer, vol. 27(1), pages 5-76, August.
    6. Paul Fenn & Simon Ashby, 2004. "Workplace Risk, Establishment Size and Union Density," British Journal of Industrial Relations, London School of Economics, vol. 42(3), pages 461-480, September.
    7. Sarah Brown & Robert McNabb & Karl Taylor, 2006. "Firm Performance, Worker Commitment and Loyalty," Working Papers 2006005, The University of Sheffield, Department of Economics, revised Apr 2006.
    8. repec:reg:rpubli:282 is not listed on IDEAS
    9. Alex Bryson & Satu Nurmi, 2011. "Private sector employment growth, 1998--2004: a panel analysis of British workplaces," Cambridge Journal of Economics, Oxford University Press, vol. 35(1), pages 85-104.
    10. Bryson, Alex & Barth, Erling & Dale-Olsen, Harald, 2012. "Do higher wages come at a price?," Journal of Economic Psychology, Elsevier, vol. 33(1), pages 251-263.
    11. Francis Green, 2008. "Leeway for the Loyal: A Model of Employee Discretion," British Journal of Industrial Relations, London School of Economics, vol. 46(1), pages 1-32, March.
    12. repec:nsr:niesrd:371 is not listed on IDEAS
    13. Michael French & Laura Dunlap, 1998. "Compensating wage differentials for job stress," Applied Economics, Taylor & Francis Journals, vol. 30(8), pages 1067-1075.
    14. Barry Reilly & Pierella Paci & Peter Holl, 1995. "Unions, Safety Committees and Workplace Injuries," British Journal of Industrial Relations, London School of Economics, vol. 33(2), pages 275-288, June.
    15. Groot, Wim & Maassen van den Brink, Henriette, 1999. "The price of stress1," Journal of Economic Psychology, Elsevier, vol. 20(1), pages 83-103, February.
    16. Machin, Stephen J & Stewart, Mark B, 1990. "Unions and the Financial Performance of British Private Sector Establishments," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 5(4), pages 327-350, Oct.-Dec..
    17. Cottini, Elena & Lucifora, Claudio, 2010. "Mental Health and Working Conditions in European Countries," IZA Discussion Papers 4717, Institute for the Study of Labor (IZA).
    18. Dewa, Carolyn S. & Lin, Elizabeth, 2000. "Chronic physical illness, psychiatric disorder and disability in the workplace," Social Science & Medicine, Elsevier, vol. 51(1), pages 41-50, July.
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    Citations

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    Cited by:

    1. Christian Grund & Niels Westergaard-Nielsen, 2008. "The Dispersion of Employees' Wage Increases and Firm Performance," ILR Review, Cornell University, ILR School, vol. 61(4), pages 485-501, July.
    2. repec:lan:wpaper:4012 is not listed on IDEAS
    3. Benoît Mahy & François Rycx & Mélanie Volral, 2011. "Does Wage Dispersion Make All Firms Productive?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(4), pages 455-489, September.
    4. Benoît Mahy & François Rycx & Mélanie Volral, 2011. "Wage Dispersion and Firm Productivity in Different Working Environments," British Journal of Industrial Relations, London School of Economics, vol. 49(3), pages 460-485, September.
    5. repec:lan:wpaper:3727 is not listed on IDEAS
    6. repec:lan:wpaper:3621 is not listed on IDEAS
    7. Peiyi Yu & Bac Luu, 2016. "Bank performance and executive pay: tournament or teamwork," Review of Quantitative Finance and Accounting, Springer, vol. 47(3), pages 607-643, October.
    8. Egon Franck & Stephan Nüesch, 2007. "Wage Dispersion and Team Performance - An Empirical Panel Analysis," Working Papers 0073, University of Zurich, Institute for Strategy and Business Economics (ISU).
    9. Nils Braakmann, 2008. "Intra-firm wage inequality and firm performance – First evidence from German linked employer-employee-data," Working Paper Series in Economics 77, University of Lüneburg, Institute of Economics.
    10. Christian Grund & Niels Westergaard-Nielsen, 2008. "The Dispersion of Employees' Wage Increases and Firm Performance," ILR Review, Cornell University, ILR School, vol. 61(4), pages 485-501, July.
    11. repec:lan:wpaper:3619 is not listed on IDEAS
    12. A I Petrescu & R Simmons & S Bradley, 2004. "The impacts of human resource management practices and pay inequality on workers' job satisfaction," Working Papers 542602, Lancaster University Management School, Economics Department.

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